TATA INFRASTRUCTURE
Though not a stellar performer, it has impressed. In the first year of its launch (2005), it underperformed in all the three quarters it completed. Since then, it has managed to beat the annual category average every year, with its best performance in 2006, when it returned 60.3 per cent (category average: 54.2 per cent).
This fund has a very broad definition of infrastructure, to encompass the regular infrastructure sectors as well as housing, banking and financial Services, and healthcare and related industries.
Though the fund's large-cap exposure was more predominant in end-2008 and early-2009, the fund manager does not feel it right to say it generally sports a large-cap bias. The fund's portfolio has never gone below 44 stocks, but on numerous occasions has crossed 60. And single-stock allocation has been circuited at 7 per cent.
Right now, the fund manager is betting on energy, which is at 24 per cent (October 31). The exposure to financial services has again been moved up to 20.1 per cent (October 31) after being cut to 12.7 per cent (August 31). Also, the allocation to the metals sector has been moved up to 10.8 per cent in October 2009, from four per cent in April 2009. With the allocation of 14.3 per cent, engineering is among the top sectors of the fund.
The fund has done well in the recent past and going forward, one is likely to see a lot more stock-specific activity. ICICI PRUDENTIAL INFRASTRUCTURE
The highest alpha generator in the category, its returns have impressed. Launched in 2005, it has emerged as a strong contender since 2007, when its back-to-back annual performance put it ahead of its peers.
It beat the category average in 2006 and was the best performer in 2007 (92.9 per cent) and 2008 (minus 51.6 per cent). It also has the highest 3-year annualised return (15.6 per cent) among infrastructure funds (as on October 31, 2009).
But where the fund had a miss was in the recent rally (March 9- October 31), with a return of just 74.4 per cent, way below the category average of 97 per cent. Not surprising when you see that its equity exposure (including derivatives) dropped from 89 per cent (March) to 57 per cent (May).
The fund manager's style and investment philosophy is valuation driven. He actively changes the portfolio's complexion, with no qualms about going against the herd. Currently, the fund is betting heavily on energy, with the allocation to the sector having been moved up to as high as 38 per cent in October.
This fund includes every sector barring FMCG, media, infotech and pharma. The portfolio has averaged around 40 stocks this year. The fund manager rarely bets more than 25 per cent on a single sector or more than 8 per cent on a single stock, barring a few large cap names.
UTI INFRASTRUCTURE
The initiator of the theme got off to an impressive start. In 2005, it beat its only other peer, DSP Black Rock T I G E R In 2006, it was the best performer among its category of six other diversified equity funds, too.
In 2007, a trait that came across strongly was the fund manager's ability to deliver but remain grounded. Though the market was on a roll and its peers betted on mid- and small-caps, this fund increased its large cap exposure from 45 per cent (January) to 60 per cent (December). Simultaneously, allocation to construction dropped from 21 per cent to 15 per cent, despite this sector rallying. His exposure to metals hovered below the category average. The trade-off? It had to let go of its prime spot (category returns: 82.8 per cent) but still managed to deliver (72 per cent).
This year, the results have been mixed. In the first quarter of 2009, its equity allocation dropped further and stood way below the category average. This move clearly paid off and has resulted in the fund shedding a mere 0.9 per cent in the first quarter of 2009 (category average: minus 5.3). But the fund manager was not too quick in upping his equity exposure when the market began to rally.
The fund manager typically adheres to a buy-and-hold strategy and tends to play it safe with individual stock holdings, which have never crossed 7 per cent, barring Reliance Industries Ltd. Some of his favourite picks are BHEL, Reliance Industries, Larsen & Toubro and Bharti Airtel. All in all, a very respectable offering.
